Amid declining sponge prices, Odisha based merchant iron ore miners maintained their offers at same levels in 2nd half of Oct’16. Dull demand in finished steel products has pulled back sponge iron prices. However majority market participants are optimistic that prices may rise post Diwali holidays ending 2nd Nov’16. It appears that miners are in ‘wait and watch’ mode and are likely to open prices later in 1st week of Nov’16.
Amid rise in coking coal and iron ore prices in global market, India’s domestic market is also expected to improve. Miners may open iron ore price after 5 Nov’16.
Key highlights that will govern iron ore prices for Nov’16 –
1. Chhattisgarh based sponge plants’ iron ore sourcing from NMDC remains stable – C.G. based units have sourced 64 rakes in Oct’16* from NMDC (C.G.). Last month they procured 64 rakes. NMDC had increased iron ore prices by INR 300-460/MT M-o-M in Oct’16 post sharp hike in sponge prices in September and decent deliveries.
2. KIOCL sourced 23 rakes of fines in Oct* from NMDC – Mangalore based pellet maker – KIOCL sourced 23 rakes from NMDC (C.G.) in Oct’16* against 22 rakes in Sept’16.
3. JSW Steel’s sourcing from NMDC stable, increases from Odisha – JSW Steel has procured 34 rakes from NMDC (C.G.) in Oct’16*. Last month it sourced 33 rakes. From Odisha the steel maker has increased its iron ore sourcing from 0.27 MnT in Sept’16 to 0.28 MnT in Oct’16*.
4. RINL’s sourcing from NMDC moves up significantly – Vizag steel sourced 127 rakes of iron ore from NMDC (C.G.) so far in this month. Last month it procured 117 rakes.
5. NMDC’s movement for export moves up sharply – NMDC loaded 79 rakes for export in Oct’16* compared to 49 rakes last month.
6. Domestic sponge iron prices plunge – Sponge iron prices declined sharply in Oct’16. In central India prices fell by INR 1,000-1,300/MT M-o-M and in eastern India prices fell by INR 600-700/MT M-o-M.
7. Iron pellet prices under pressure- Pellet manufacturers are seen selling pellets under pressure in Odisha and central India. Central India sponge manufacturers mentioned buying iron pellet at INR 4,350/MT FOR Raipur from Odisha with qty 9,000 MT under advance payment. Raipur (CG) pellet prices are at INR 4,600-4,800/MT (ex works).
However east based pellet manufacturer continue to exporting pellets at USD 91-92/MT, CFR China.
8. Global iron ore prices rise significantly – Seaborne iron ore prices in China moved up sharply by USD 8/MT M-o-M and touched USD 64/MT, CFR China for Fe 62% fines. Expensive coking coal and coke has forced Chinese steel mills to go for high grade material usage which has lifted lump and pellet premium.
Note:- Oct’16 data updated till 28 Oct’16